Rents in the capital have “over-shot and are adjusting”, falling 0.4 per cent in the first half of 2024, reports Zoopla.Over a third of London boroughs (12 of 33) recorded rents falling so far this year, led by inner London areas such as Tower Hamlets, Newham and Greenwich.
While rents across the UK were up 5.7 per cent, Zoopla said that the UK was “well past peak rental growth” as rents softened in major cities. Rents are still rising in areas where people priced out of more expensive locations are relocating to find more affordable housing.
Rental inflation (the year-on-year change in prices) for new lets has slowed to 1.6 per cent — the lowest rate in three years — down from 6.9 per cent in 2021.
“Renters will welcome the fact that rents for new lets are rising at their slowest pace for three years, said Richard Donnell, executive director at Zoopla.
“Rents have risen so fast they have over-shot in some cities and we are seeing modest falls in rents in some cities as rents adjust to weaker demand and modest increases in the availability of homes for rent.”
This easing between supply and demand is for a number of reasons, said the property portal.
Lower mortgage rates — made available by high street lenders ahead of the Bank of England’s minor base rate cut — have made it easier for first-time buyers to leave the renting trap, freeing up more rental properties. Demand for rental properties has falled 39 per cent over the past year, Zoopla reported.
Although some private landlords are selling up due to historically high mortgage rates, corporate landlords are buying up more new homes to rent out. As a result, estate agents are reporting a 17 per cent increase in the number of rental properties on their books compared to this time last year.
The average UK rent is currently £1,232 a month, £66 more than this time last year.
While Zoopla is not forecasting an overall fall in rents for 2024, rent hikes could be less dramatic than in recent years.
“Rents are on track to be three to four per cent higher over 2024,” said Donnell. “[That’s] more than half the level recorded last year and below earnings growth providing some modest relief for the UK’s private renters.”
